Covid costs UK market £1.3bn
- December 8, 2020
- Posted by: Louise Cooke
- Category: News
A new report has found that the total market value for UK primary vehicle body repairs has fallen by 26.6% to £3.57bn in 2020, as a direct result of the Covid-19 pandemic.
Published by independent market research company Trend Tracker, the Emerging from Covid-19 – The UK Vehicle Body Repair and Motor Insurance Market 2020-2023 Market Study reports that accident repair volumes declined by 30% in 2020.
However, as repair costs have continued on an upward trajectory, predominantly due to the increased complexity of Advanced Driver-Assistance Systems (ADAS) and an increasing number of vehicles with hybrid or electric powertrains, the financial loss to the sector is calculated at 26.6%.
Mark Bull, director of Trend Tracker said: “Anecdotally, the volume demand for insurer-funded accident damage repairs fell by approximately 80% overnight as the initial nationwide lockdown came into effect in March, however they had steadily recovered to approximately 75% of pre-Covid levels as government restrictions eased, until November that is.
“The Trend Tracker research has monitored repair volume and values throughout the year to calculate quantitative figures that show a projected annual loss of £1.3bn in 2020 to the UK vehicle repair industry.”
Of the £1.3bn market contraction, which can readily be viewed as a direct saving to motor insurers’ claims expenditure, £5.6m is attributed to a loss of parts sales, £4.1m as lost labour sales and £2.6m as lost paint sales, with the remainder being additional and consumable items.
Meanwhile, offsetting some of the financial loss to the vehicle body repair market, the cost of repairs continues to rise year-on-year. Since 2018 to the first half of 2020, overall repair costs generated via the Solera Audatex system have increased by 10.2%, from an average of £1,860 to £2,050 per repair.
Taking a longer-term view, since 2013 overall repair costs generated via the Solera Audatex system have increased by 48.5% and they show no sign of slowing, due primarily to ever-increasing vehicle complexity.
On a somewhat positive note from a vehicle body repair industry perspective, Bull continued: “While we know that 2020 has been devastating for many businesses across all sectors, the vehicle body repair sector was very much on the road to recovery until lockdown 2.0 came into effect. “However, with the excellent news that a vaccine will be available shortly, we would expect traffic volumes to return to greater levels during 2021, which should correlate to a V-shape recovery in terms of the number of accident damage claims. This is encouraging for bodyshops, although we predict that pre-Covid work volume will not return until 2022.”